REITs may fetch $10 billion this fiscal itself: Experts

MUMBAI: Real Estate Investment Trusts (REITs), which now seems to be a reality, is likely to net a whopping $10 billion this fiscal itself, thus providing the much-needed funds to the cash-starved developers, say industry experts.

Finance Minister Arun Jaitley had announced in the Budget that REITs (real estate investment trusts) will get pass- through entity status and other incentives, including exemption from long-term capital gains tax.

"REITs will be the new funding mechanism for rental assets. This should bring in about $10 billion by March, of course subject to all the regulation by Sebi and stamp duty concessions by the state governments to be put in place," city-based builder Hiranandani Group Managing Director Niranjan Hiranandani told PTI.

A REIT is a company that owns, and in most cases, operates income-producing real estate properties by pooling in money from several investors. A pass-through entity does not have to pay corporate tax.

"The clarification that tax on the income earned by REITs will be a pass through, removes a major impediment to its attractiveness. This will allow channelising of funds from retail investors to the sector. They would also provide diversification benefit to real estate investors," an analyst at India Ratings said.

REITs will reduce the pressure on the banking system, avail fresh equity and attract long-term finance from foreign as well as domestic sources, say experts.

"Dependence of developers on bank funding is likely to come down as REITs will enable them to get access to cheaper funds compared to debt which is costly. REITs will attract investments from long term-capital providers like pension funds," Ernst & Young India tax partner Gaurav Karnik said.

"The pass-through entity status for REITs would pronounce a plethora of opportunities to developers and funds alongside addressing some sector specific issues of lack of transparency, organising the real estate industry among others," Apex Multicons chairman Anant Pandit said.

However, when asked about the quantum funds that may flow into the market, he said it is too early to assess as Sebi has to notify the final regulations.

Latest Realty News

MUMBAI: The 2014-15 budget is both positive and promising that focuses on reviving the sentiment of property buyers and investors and promoting investment with a view to give fillip to construction and housing sector, a significant contributor to GDP.

MUMBAI: Realty firm Parsvnath Developers will consider raising foreign funds in two commercial projects in the national capital that have now become FDI compliant after the government eased rules in the Budget.

MUMBAI: The BSE has launched an advisory group on REITs (real estate investment trusts), which are aimed at attracting long-term funds to the cash-strapped realty sector from both foreign as well as domestic investors.

PUNE: Pragmatic measures to support the country's housing sector proposed in the Budget will encourage developers to plan larger residential projects and attract substantial investments from Indian and overseas investors, real estate developers from the city have said.

MUMBAI: The proposals announced in Budget 2014-15 for the realty sector are expected to improve liquidity for cash-short real estate companies, improve demand for housing and increase the supply of affordable houses.

MUMBAI: The proposals announced in Budget 2014-15 for the realty sector are expected to improve liquidity for cash-short real estate companies, improve demand for housing and increase the supply of affordable houses.

MUMBAI/BANGALORE/NEW DELH: Finance minister Arun Jaitley on Thursday announced a slew of measures to spur the slackening real estate sector that includes an allocation of Rs 7,060 crore for the development of 100 smart cities, relaxed norms for the entry of foreign capital and tax relief on home loans.

BANGALORE: Karnataka government will soon bring about a much-awaited reforms in revenue related issues mainly to check fraudulent land deals, illegal formation of layouts and corruption in sub-registrar offices.

DELHI: Housing and basic services for the economically weaker sections have got a fillip in this year’s Budget. Besides Rs 700 crore for water and power reforms, the city has received a grant of Rs 1,350 crore, of which Rs 700 crore is for development projects under the Jawaharlal Nehru National Urban Renewal Mission.